KATHMANDU, Aug 28 (AFP) - A state of emergency in Nepal, imposed to combat a violent Maoist insurgency, is due to expire Wednesday and is unlikely to be extended because of forthcoming parliamentary elections, government sources said.

The emergency gives local authorities and security forces wide powers to detain and interrogate suspected rebels and impose curfews. It was clamped on November 26 last year after the guerrillas broke a four-month ceasefire.

The Maoist insurgency, launched in 1996 for a communist republic, has claimed more than 4,300 lives. Around two-thirds of the deaths have come since November.

Hours before the emergency was due to lapse at midnight (0545 GMT), a bomb went off in the heart of Kathmandu, which police blamed on the Maoists. No one was injured in the blast on the third floor of a supermarket.

The emergency was initially introduced for three months by King Gyanendra, on the advice of Prime Minister Sher Bahadur Deuba. It had to be renewed in February with the approval of parliament.

In May it was renewed again. But this time the opposition and some members of the ruling Nepali Congress (NC) party were critical, saying the emergency was restricting human rights and had not stopped the Maoists.

It seemed Deuba would not get the backing of the necessary two-thirds of MPs.

Instead he decided to dissolve parliament and call early elections for November 13. This led to political turmoil and split the NC into two factions.

A week later the king extended the emergency by ordinance for a further three months.

Critics have questioned how democratic elections can take place under a state of emergency.

On Tuesday Deuba, during a visit to Brussels, said Nepal would lift the state of emergency for November elections, but it could be reimposed later.

"There will be no emergency during the election," Deuba told reporters after talks with European Commission President Romano Prodi.

He said that after the election, parliament would be asked to vote on reimposing the state of emergency.

"If we invoke emergency it would be ratified by two thirds of the parliament. I myself am for democracy," said Deuba. "The emergency is only targetted to stop the... terrorists."

A cabinet source in Kathmandu said it was unlikely the emergency would be extended unless something "drastic" occurred.

The source said the government was preparing to introduce a decree to use after the expiry of the emergency, but did not give details.

The Himalayan Times said this would be a reworking of the Terrorist and Disruptive Activities Act, which was passed into law earlier this year.

"Though the prime minister is the final authority unless something dramatic happens there is no plan to impose an emergency for yet another term," the English daily newspaper said.

Chranjibi Wagle, who is acting prime minister when Deuba is abroad, said Wednesday that nothing had officially been decided on the emergency.

"A decision will be made only after the prime minister returns home and we will decide whether the emergency should be extended. But so far nothing has been decided."

Deuba took office last year and initiated a ceasefire with the rebels. But three rounds of talks stalled and the rebels launched a flurry of attacks in November.

The Maoists recently made a call for dialogue, but the government has said it will not hold talks until the rebels give up their arms.

"Currently, we are not in a process of holding dialogues with the rebels, however, if they lay down their arms, then we are ready for the talks," Wagle said.

"But their call for the dialogues is misleading, it is not real," he said. "The demand of the opposition asking the governemnt to hold the talks with the rebels is not justifiable because they have not yet laid down their arms."

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